Disney near Fox unit deal
Sources say children's cable channels may be sold for $3.3B plus debt
July 21, 2001: 5:27 p.m. ET
NEW YORK (Reuters) - The Walt Disney Co. is close to a deal to buy Fox Family Worldwide Inc., a set of children's cable channels, for $3.3 billion from News Corp. Ltd and Saban Entertainment, sources familiar with the matter said Saturday.
The deal, in which Disney (DIS: Research, Estimates) will also assume $2 billion in debt, would generate much-needed cash for Murdoch as he pursues talks to buy General Motors Corp. (GMH: Research, Estimates)'s DirecTV satellite television service. It would also dispose of an asset whose low ratings and poor financial performance has caused a headache for News Corp.
"Disney is expected to make an announcement early next week," one source told Reuters.
News Corp. (NWS: Research, Estimates) and Saban executives declined to comment, while Disney executives were not immediately available for comment. But another source said negotiations were continuing.
While Disney was the frontrunner, the source said AOL Time Warner Inc. (AOL: Research, Estimates), which owns a number of cable properties including HBO, CNN, TBS and TNT, and Viacom Inc. (VIA: Research, Estimates), which owns Nickelodeon and MTV, were also taking a close look at the company.
Such negotiations could lead the price tag to change slightly, she said.
"AOL could be a good fit because it gives them footprint in Europe," the source said. She added that Fox Family could also complement Viacom's Nickelodeon children's cable channel.
Neither company was available for comment. But Viacom President Mel Karmazin has repeatedly said he would only do a deal that added to its cash flow in the first year of operations.
News Corp. and Saban, which each own 49.5 percent of Fox Family Worldwide Inc., were originally believed to be asking as much as $6 billion for the unit, although many observers believed that price was too high.
In addition to the Fox Family channel, which has 81 million subscribers, the unit also includes a library of assets such as "The Mighty Morphin' Power Rangers."
In December, Haim Saban, chairman and chief executive of Fox Family, exercised an option to sell his stake to News Corp. Under the agreement, News Corp. had three choices: to buy Saban's stake in cash; bring in a partner to buy Saban's stake; or sell the entire operation.
Buying the stake outright was News Corp.'s least desirable option because it risked jeopardizing the company's credit rating, which is currently the lowest investment grade without crossing into junk-bond status.
News Corp. Chairman and CEO Rupert Murdoch, for his part, has made no secret about his disappointment with the unit's performance. He had said in
Sources say children's cable channels may be sold for $3.3B plus debt
July 21, 2001: 5:27 p.m. ET
NEW YORK (Reuters) - The Walt Disney Co. is close to a deal to buy Fox Family Worldwide Inc., a set of children's cable channels, for $3.3 billion from News Corp. Ltd and Saban Entertainment, sources familiar with the matter said Saturday.
The deal, in which Disney (DIS: Research, Estimates) will also assume $2 billion in debt, would generate much-needed cash for Murdoch as he pursues talks to buy General Motors Corp. (GMH: Research, Estimates)'s DirecTV satellite television service. It would also dispose of an asset whose low ratings and poor financial performance has caused a headache for News Corp.
"Disney is expected to make an announcement early next week," one source told Reuters.
News Corp. (NWS: Research, Estimates) and Saban executives declined to comment, while Disney executives were not immediately available for comment. But another source said negotiations were continuing.
While Disney was the frontrunner, the source said AOL Time Warner Inc. (AOL: Research, Estimates), which owns a number of cable properties including HBO, CNN, TBS and TNT, and Viacom Inc. (VIA: Research, Estimates), which owns Nickelodeon and MTV, were also taking a close look at the company.
Such negotiations could lead the price tag to change slightly, she said.
"AOL could be a good fit because it gives them footprint in Europe," the source said. She added that Fox Family could also complement Viacom's Nickelodeon children's cable channel.
Neither company was available for comment. But Viacom President Mel Karmazin has repeatedly said he would only do a deal that added to its cash flow in the first year of operations.
News Corp. and Saban, which each own 49.5 percent of Fox Family Worldwide Inc., were originally believed to be asking as much as $6 billion for the unit, although many observers believed that price was too high.
In addition to the Fox Family channel, which has 81 million subscribers, the unit also includes a library of assets such as "The Mighty Morphin' Power Rangers."
In December, Haim Saban, chairman and chief executive of Fox Family, exercised an option to sell his stake to News Corp. Under the agreement, News Corp. had three choices: to buy Saban's stake in cash; bring in a partner to buy Saban's stake; or sell the entire operation.
Buying the stake outright was News Corp.'s least desirable option because it risked jeopardizing the company's credit rating, which is currently the lowest investment grade without crossing into junk-bond status.
News Corp. Chairman and CEO Rupert Murdoch, for his part, has made no secret about his disappointment with the unit's performance. He had said in